European Commission surrenders EU solar industry to China, while US imposes 50% tariffs

08/12/2014

European Commission surrenders EU solar industry to China, while US imposes 50% tariffs

On 25th July the U.S. government imposed new anti-dumping and anti-subsidy duties of nearly 50% against illegally subsidised and dumped solar products from China. Meanwhile on the same day, the European Commission welcomed a "proposal" from the Chinese Chamber of Commerce to lower dumped import prices of solar products in the EU, and revise the EU-China solar undertaking to Beijing’s advantage.

Milan Nitzschke, President of EU ProSun said “The contrast of decisive U.S. trade defence measures with the position of the EU is striking. An additional 20 EU manufacturers of solar products have filed for bankruptcy, sold or closed down their production, following the EU-China solar undertaking last year.

Meanwhile the Chinese Ministry of Industry announced this month that a total of 161 solar companies will be subsidized by the state. The major part of the production of these companies is exported to the EU, wiping out jobs and factories here."

Furthermore, Beijing has called for a seemingly innocuous revision to the Undertaking that if not stopped will further decimate the European solar industry. DG Trade has already forwarded China's proposal to other services for rubber-stamp approval, and intends to gloss over it as a technicality in a meeting with EU Member States on 30th July. EU industry is extremely concerned as China is pushing for a mechanism that will lead to a continuous decrease of the Minimum Import Price (MIP). The current undertaking allows reductions of the MIP only if prices on the international market for solar modules decrease significantly.

Nitzschke said: “China's dumping solar industry is desperate because all price indexes worldwide stayed stable since the middle of last year. That’s not a surprise since international prices have already been below production costs for a long time. China's innovation now is to put language into the undertaking that converts U.S. dollar international prices into euros. This will guarantee a downward price revision based
solely on the depreciation of the US dollar against the euro since the summer of 2013.

After that mathematical sleight of hand, the formerly stable Bloomberg price index will be forced downwards and thereby reduce the MIP further.”

China has already attempted such currency trickery when Beijing asked DG Trade to reduce the MIP by 3 euro cent due to currency conversion from 1 April 2014. The Commission did what Beijing asked, causing immediate injury to EU producers, as well as to all other international competitors outside Europe that are not state-subsidized by China. EU ProSun objected to this MIP reduction and demonstrated convincingly that there is no legal basis for such a currency conversion, and therefore for the MIP reduction already in place since April 1st. Rather than backing down, China has pressured the Commission to simply change the undertaking contract. Nitzschke commented: “Beijing gave Brussels ‘an offer they could not refuse’, increasing injury to European industry and neutering EU trade defence measures.”

Nitzschke concluded: “In June 2014, EU ProSun submitted over 1,500 proposals by Chinese solar companies offering prices below the minimum level agreed by the EU Commission and China. The European Commission has said it is investigating this claim, but nothing has been done yet against these illegal practices. The European Commission must reject China’s attempts to modify the undertaking and manipulate the EU solar market into a deadly spiral to the bottom.”